"ARRIS posted a solid second quarter, with non-GAAP earnings growing 14% year-over-year to $0.72 per share with continued strong performance from our higher margin Network & Cloud and Enterprise businesses," said Bruce McClelland, ARRIS CEO. "Revenue grew by 4% year-over-year with the addition of Ruckus and increased E6000 CCAP sales. We have been active buyers of our stock in 2018 and intend to allocate the majority of our free cash flow to stock repurchases for the remainder of the year, targeting a minimum of $400 million for the year."

"For the third quarter 2018, we are estimating revenues in the range of $1.680 billion to $1.730 billion. We expect GAAP net income per diluted share in the range of $0.20 to $0.25 and adjusted net income per diluted share in the range of $0.65 to $0.70. For full year 2018, we now expect sales to be in the range of $6.850 billion to $7.0 billion, GAAP net income per diluted share in the range of $0.68 to $0.83 and adjusted net income per diluted share in the range of $2.85 to $3.00."

Revenues in the second quarter 2018 of $1.727 billion were up $63 million, or 4%, as compared to second quarter 2017 revenues of $1.664 billion and up $149 million, or 9%, as compared to first quarter 2018 revenues of $1.578 billion.

Through the first six months of 2018, revenues were $3.304 billion, up $157 million, or 5%, as compared to the first six months of 2017 revenues of $3.147 billion.

GAAP net income in the second quarter 2018 was $0.19 per diluted share, as compared to GAAP net income of $0.16 per diluted share in the second quarter 2017 and a GAAP net loss of $(0.07) per diluted share in the first quarter 2018.

Year to date 2018 GAAP net income was $0.12 per diluted share, as compared to the first six months of 2017 GAAP net loss of $(0.05) per diluted share.

Adjusted net income (a non-GAAP measure) in the second quarter 2018 was $0.72 per diluted share, as compared to $0.63 per diluted share for the second quarter 2017, and first quarter 2018 adjusted net income of $0.73 per diluted share.

Year to date adjusted net income was $1.45 per diluted share for 2018 as compared to the first six months of 2017 adjusted net income of $1.04 per diluted share.

A reconciliation of adjusted net income per diluted share to GAAP net income per diluted share is attached to this release and can be found on the Company's website (www.arris.com).

Cash & Cash Equivalents - The Company ended the second quarter 2018 with $548 million of cash resources, as compared to $543 million at the end of the first quarter 2018. The Company generated $103 million of cash from operating activities during the second quarter 2018, as compared to $246 million during the second quarter of 2017. Through the first six months of 2018 the company generated $199 million of cash from operating activities. This compares to $496 million during the same period in 2017.

The Company repurchased approximately 4.0 million ordinary shares for $100 million during the second quarter of 2018. Since the end of the second quarter, the Company has repurchased approximately 2.0 million additional ordinary shares for $50 million. Through August 1, 2018, the Company has repurchased 6.9 million ordinary shares for $175 million. As of August 1, 2018, the Company has $350 million remaining in available repurchase authorization.

Order backlog at the end of the second quarter 2018 was $1.258 billion as compared to $1.326 billion and $1.293 billion at the end of the second quarter 2017 and the first quarter 2018, respectively. The Company's book-to-bill ratio in the second quarter 2018 was 0.98 as compared to the second quarter 2017 of 1.01 and the first quarter 2018 of 1.11.

ARRIS management will conduct a conference call at 5:00 pm EDT, today, Wednesday, August 1, 2018, to discuss second quarter 2018 results. You may participate in this conference call by dialing 888-655-5028 or 503-343-6025 for international calls prior to the start of the call. Please note that ARRIS will not accept any calls related to this earnings release until after the conclusion of the conference call. A replay of the conference call can be accessed approximately two hours after the call through August 8, 2018, by dialing 855-859-2056 or 404-537-3406 for international calls and using the pass code 4368658. A replay also will be made available for a period of 12 months following the conference call on ARRIS' website at www.arris.com.

Forward-Looking Statements

Statements made in this press release, including those related to revenues and net income for the third quarter and full year 2018, growth expectations, share repurchases, cost initiatives, the general market outlook and industry trends are forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Among other things:

projected results for the third quarter 2018, as well as the general outlook for 2018, are based on preliminary estimates, assumptions and projections that management believes to be reasonable at this time, but are beyond management's control;

volatility in component pricing and supply could impact revenues and gross margins more than currently anticipated;

fluctuations in share price or reductions in free cash flow may impact the volume of share repurchases;

recently enacted tariffs on imports from China and the proposed 10% tariff on additional products imported from China could have a material adverse impact on our financial results;

the anticipated benefits from the Ruckus Networks acquisition may not be realized;

volatility in currency fluctuation may adversely impact our international customers' ability or willingness to purchase products and the pricing of products;

impacts of the U.K. invoking Article 50 of the Lisbon Treaty to leave the European Union, could have an adverse impact on results of operations;

regulatory changes, including those related to recently completed changes to the U.S. income tax code, could have an adverse impact on operations and results of operations;

the impact of litigation and similar regulatory proceedings that we are involved in or may become involved in, including the costs of such litigation; and

the Company's customers operate in a capital-intensive consumer-based industry, and volatility in the capital markets or changes in customer spending may adversely impact their ability or willingness to purchase the products that the Company offers.

These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the Company's business and results from operations. Additional information regarding these and other factors can be found in the Company's reports filed with the Securities and Exchange Commission, including its Form 10-Q for the quarter ended March 31, 2018. In providing forward-looking statements, the Company expressly disclaims any obligation to update these statements publicly or otherwise, whether as a result of new information, future events or otherwise, except as required by law.

About ARRISARRIS International plc (NASDAQ: ARRS) is powering a smart, connected world. The company's leading hardware, software and services transform the way that people and businesses stay informed, entertained and connected. For more information, visit www.arris.com.

The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or referred to herein as "reported"). However, management believes that certain non-GAAP financial measures provide management and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the factors management uses in planning for and forecasting future periods. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company's reported results prepared in accordance with GAAP. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Reduction in Revenue Related to Warrants: We entered into agreements with two customers for the issuance of warrants to purchase up to 14.0 million of ARRIS's ordinary shares. Vesting of the warrants is subject to certain purchase volume commitments, and therefore the accounting guidance requires that we record any change in the fair value of warrants as a reduction in revenue. Until final vesting, changes in the fair value of the warrants will be marked to market and any adjustment recorded in revenue. We have excluded the effect of the implied fair value in calculating our non-GAAP financial measures. We believe it is useful to understand the effects of these items on our total revenues and gross margin.

Acquisition Accounting Impacts Related to Deferred Revenue: In connection with the accounting related to our acquisitions, business combination rules require us to account for the fair values of deferred revenue arrangements for post contract support in our purchase accounting. The non-GAAP adjustment to our sales and cost of sales is intended to include the full amounts of such revenues as if these purchase accounting adjustments had not been applied. We believe the adjustment to these revenues is useful as a measure of the ongoing performance of our business. We historically have experienced high renewal rates related to our support agreements, and our objective is to increase the renewal rates on acquired post contract support agreements. However, we cannot be certain that our customers will renew their contracts.

Stock-Based Compensation Expense: We have excluded the effect of stock-based compensation expenses in calculating our non-GAAP operating expenses and net income (loss) measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. We record non-cash compensation expense related to grants of restricted stock units. Depending upon the size, timing and the terms of the grants, the non-cash compensation expense may vary significantly but will recur in future periods.

Acquisition Accounting Impacts Related to Inventory Valuation: In connection with the accounting related to our acquisitions, business combinations rules require the acquired inventory be recorded at fair value on the opening balance sheet. This is different from historical cost. Essentially, we are required to write the inventory up to the end customer price less a reasonable margin as a distributor. We have excluded the resulting adjustments in inventory and cost of goods sold as the historic and forward gross margin trends will differ as a result of the adjustments. We believe it is useful to understand the effects of this on cost of goods sold and margin.

Integration, Acquisition, Restructuring and Other Costs: We have excluded the effect of acquisition, integration, and other expenses and the effect of restructuring expenses in calculating our non-GAAP operating expenses and net income measures. We incurred expenses in connection with the Pace and Ruckus Networks acquisitions, which we generally would not otherwise incur in the periods presented as part of our continuing operations. Acquisition and integration expenses consist of transaction costs, costs for transitional employees, other acquired employee related costs, and integration related outside services. Restructuring expenses consist of employee severance, abandoned facilities, product line disposition and other exit costs. We believe it is useful to understand the effects of these items on our total operating expenses.

Impairment of Goodwill and Intangible Assets: We have excluded the effect of the estimated impairment of goodwill and intangible assets in calculating our non-GAAP operating expenses and net income measures. Although an impairment does not directly impact the Company's current cash position, such expense represents the declining value of the business, technology and other intangible assets that were acquired. We exclude these impairments when significant and they are not reflective of ongoing business and operating results.

Amortization of Intangible Assets: We have excluded the effect of amortization of intangible assets in calculating our non-GAAP operating expenses and net income (loss) measures. Amortization of intangible assets is non-cash, and is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

Noncontrolling Interest share of Non-GAAP Adjustments: The joint venture formed for the ActiveVideo acquisition is accounted for by ARRIS under the consolidation method. As a result, the consolidated Statements of Income include the revenues, expenses, and gains and losses of the noncontrolling interest. The amount of net income (loss) related to the noncontrolling interest are reported and presented separately in the consolidated Statements of Operations. We have excluded the noncontrolling share of any non- GAAP adjusted measures recorded by the venture, as we believe it is useful to understand the effect of excluding this item when evaluating our ongoing performance.

Impairment on Investments: We have excluded the effect of other-than-temporary impairments and certain gains on investments in calculating our non-GAAP financial measures. We believe it is useful to understand the effect of this non-cash item in our other expense (income).

Debt Amendment Fees: In 2017, the Company amended its credit agreement. This debt modification allowed us to improve the terms and conditions of the credit agreement and extend the maturities of certain loan facilities. We have excluded the effect of the associated fees in calculating our non-GAAP financial measures. We believe it is useful to understand the effect of this item in our other expense (income).

Remeasurement of Deferred Taxes: The Company records foreign currency remeasurement gains and losses related to deferred tax liabilities in the United Kingdom. The foreign currency remeasurement gains and losses derived from the remeasurement of the deferred income taxes from GBP to USD. We have excluded the impact of these gains and losses in the calculation of our non-GAAP measures. We believe it is useful to understand the effects of this item on our total other expense (income).

Income Tax Expense (Benefit): We have excluded the tax effect of the non-GAAP items mentioned above. Additionally, we have excluded the effects of certain tax adjustments related to tax and legal restructuring, state and non-US valuation allowances, benefits for releases of uncertain tax positions due to settlement, change in law or statute of limitations and provision to return differences.

ARRIS INTERNATIONAL PLC

PRELIMINARY CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

2018

2018

2017

2017

2017

ASSETS

Current assets:

Cash and cash equivalents

$501,410

$506,240

$487,573

$1,379,827

$1,346,028

Short-term investments, at fair value

46,698

36,804

23,874

33,309

38,759

Total cash, cash equivalents and short term investments

548,109

543,044

511,447

1,413,136

1,384,787

Accounts receivable, net

1,183,360

1,034,608

1,218,089

1,056,225

991,539

Other receivables

192,067

169,681

157,845

145,658

132,742

Inventories, net

803,217

849,069

825,211

775,142

657,881

Prepaid income taxes

10,406

26,409

28,351

41,780

16,354

Prepaids

40,290

36,308

26,644

27,954

32,149

Other current assets

196,014

172,993

145,953

109,567

119,405

Total current assets

2,973,463

2,832,112

2,913,540

3,569,462

3,334,857

Property, plant and equipment, net

299,991

309,457

372,467

347,506

355,033

Goodwill

2,259,177

2,336,820

2,278,512

2,016,580

2,014,550

Intangible assets, net

1,580,393

1,583,299

1,771,362

1,406,591

1,491,103

Investments

69,902

69,858

71,082

73,199

61,047

Deferred income taxes

146,443

131,417

115,436

193,703

199,102

Other assets

72,155

103,525

101,858

57,246

54,843

$7,401,524

$7,366,488

$7,624,257

$7,664,287

$7,510,535

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$1,125,619

$1,010,812

$1,206,656

$1,266,214

$1,201,883

Accrued compensation, benefits and related taxes

140,387

113,029

155,966

102,222

81,355

Accrued warranty

38,651

42,434

44,507

45,036

44,812

Deferred revenue

123,590

143,740

115,224

118,598

130,454

Current portion of LT debt & financing lease obligations

83,709

83,633

83,559

89,156

89,336

Income taxes payable

2,093

4,937

6,244

4,420

9,487

Other accrued liabilities

361,315

316,206

321,113

327,099

303,013

Total current liabilities

1,875,365

1,714,791

1,933,269

1,952,745

1,860,340

Long-term debt & financing lease obligations, net of current portion

2,074,352

2,095,320

2,116,244

2,112,494

2,134,506

Accrued pension

31,889

43,443

42,637

54,867

55,532

Noncurrent deferred revenue

58,233

56,041

54,090

34,569

36,855

Noncurrent income taxes

120,987

159,148

144,665

115,434

114,187

Deferred income taxes

62,886

68,825

68,888

83,058

83,516

Other noncurrent liabilities

68,507

71,546

80,430

83,852

83,526

Total liabilities

4,292,219

4,209,114

4,440,223

4,437,018

4,368,462

Stockholders' equity:

Ordinary shares

2,722

2,769

2,768

2,788

2,786

Capital in excess of par value

3,424,906

3,392,415

3,387,128

3,367,940

3,356,183

Accumulated other comprehensive loss

(4,649)

12,545

4,552

8,838

2,211

Accumulated deficit

(329,731)

(266,264)

(225,881)

(188,375)

(256,705)

Total ARRIS International plc stockholders' equity

3,093,248

3,141,465

3,168,567

3,191,191

3,104,475

Stockholders' equity attributable to noncontrolling interest

16,056

15,909

15,467

36,078

37,598

Total stockholders' equity

3,109,304

3,157,374

3,184,034

3,227,269

3,142,073

$7,401,524

$7,366,488

$7,624,257

$7,664,287

$7,510,535

ARRIS INTERNATIONAL PLC

PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

For the Three Months

For the Six Months

Ended June 30,

Ended June 30,

2018

2017

2018

2017

Net sales

$1,726,540

$1,664,170

$3,304,250

$3,147,276

Cost of sales

1,227,785

1,260,813

2,329,812

2,406,661

Gross margin

498,755

403,357

974,438

740,615

Operating expenses:

Selling, general, and administrative expenses

173,353

113,921

334,557

218,560

Research and development expenses

167,200

133,098

336,997

266,060

Amortization of intangible assets

90,485

91,012

205,193

184,657

Impairment of goodwill

-

-

3,400

-

Integration, acquisition, restructuring and other costs

22,844

9,690

36,500

19,785

453,882

347,721

916,647

689,062

Operating income

44,873

55,636

57,792

51,553

Other expense (income):

Interest expense

23,647

23,344

46,173

43,027

(Gain) loss on investments

(844)

3,609

(317)

8,139

(Gain) loss on foreign currency

(824)

9,373

4,009

14,113

Interest income

(1,792)

(1,788)

(3,324)

(3,709)

Other (income) expense, net

(169)

926

(61)

841

Income (loss) before income taxes

24,855

20,172

11,312

(10,858)

Income tax (benefit) expense

(9,944)

(8,302)

(6,454)

1,699

Consolidated net income (loss)

34,799

28,474

17,766

(12,557)

Net loss attributable to noncontrolling interests

(955)

(1,862)

(4,388)

(3,795)

Net income (loss) attributable to ARRIS International plc

$35,754

$30,336

$22,154

($8,762)

Net net (loss) per ordinary share (1):

Basic

$ 0.19

$ 0.16

$ 0.12

$ (0.05)

Diluted

$ 0.19

$ 0.16

$ 0.12

$ (0.05)

Weighted average ordinary shares:

Basic

184,216

186,803

184,376

188,291

Diluted

185,669

189,002

186,288

188,291

(1) Calculated based on net income (loss) attributable to shareowners of ARRIS International plc

ARRIS INTERNATIONAL PLC

PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the Three Months

For the Six Months

Ended June 30,

Ended June 30,

2018

2017

2018

2017

Operating Activities:

Consolidated net income (loss)

$ 34,799

$ 28,474

$ 17,766

$ (12,557)

Depreciation

21,235

21,690

44,109

43,003

Amortization of acquired intangible assets

92,360

92,672

208,955

187,978

Amortization of deferred finance fees and debt discount

1,207

1,988

2,422

3,891

Impairment of goodwill

-

-

3,400

-

Deferred income taxes

(32,750)

(16,740)

(46,077)

(37,523)

Foreign currency remeasurement of deferred income taxes

(3,676)

4,060

21

7,191

Stock compensation expense

23,503

22,325

42,759

41,740

Provision for non-cash warrants

-

2,658

-

5,081

Provision (recovery) for doubtful accounts

-

(69)

(292)

(248)

Loss on disposal of plant, property and equipment and other

66

1,298

222

1,590

Loss on investments and others

(844)

3,609

(182)

8,139

Changes in operating assets & liabilities, net of effects of acquisitions and disposals: